Market Report, "Oman Oil & Gas Report Q2 2013", published

Oman has reason for optimism about its oil and gas sector's prospects in 2013. Its experiment in full-scale enhanced oil recovery (EOR) projects has delivered clear results, with crude production reviving to levels not seen in 10 years. Ambitious plans to expand its downstream sector, with a new grassroots refinery in Duqm, attest to the positive sentiment in the Sultanate's hydrocarbons sector. The icing on the cake would be a final investment decision on BP's proposed US$20bn tight gas development. The willingness of the authorities to tweak the pricing structure could make the scheme a bankable one for the UK supermajor - heralding a substantial long-term increase in gas production.

We highlight the following trends and developments in Oman's oil and gas sector:

Full Report Details at
- http://www.fastmr.com/prod/589207_oman_oil_gas_report_q2_2013.aspx?afid=303

* Our estimates assume oil and liquids production of 893,000 barrels per day (b/d) in 2012, with volumes rising further to a likely peak of 931,000b/d in 2014. In terms of crude exports, the pattern is for 737,000b/d in 2012, rising to 758,000b/d in 2014. State-controlled Petroleum Development Oman (PDO)'s crude production averaged 566,305b/d in 2012.
* BMI sees Oman's proven oil reserves rising from 5.5bn barrels (bbl) in 2011 to 5.9bn bbl by 2013/14, but falling to less than 5.3bn bbl over the long-term forecast period to 2021. The success of enhanced oil recovery (EOR) is critical both in terms of raising estimates of recoverable oil, and in terms of oil production levels.
* PDO is preparing to spend significant amounts to boost exploration and production (E&P) activities in the next five years. According to reports, the company will invest US$26bn, as part of a longer-term plan to spend US$60-70bn in the oil and gas sector over the next 10 years.
* Sweden-based Tethys Oil's discovery of oil in four separate formations with its B4EW4 exploration well on Block 4 onshore Oman was announced in February 2013. Exploration of the field began in November 2012 and the well, which was drilled to a total depth of 3,030 metres (m), encountered strong oil shows in the Lower Al Bashir, Buah, Khufai and Masirah Bay formations.
* DNO, a Norwegian independent, reported record production figures from its holdings at Oman's Block 8 at the end of 2012. Output at the block, the only currently producing offshore block in the country, reportedly reached a record 20,000b/d of oil and 1.6mn cubic metres per day (Mcm/d) of gas. The rapid increase in output, almost triple and double previous oil and gas production at the site, has left onshore processing facilities at Khor Khwair struggling to cope.
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